Emetrio Cui vs Arellano University

Preceding Facts.
- Cui took his pre-law course in Arellano University
- S.Y. 1948- 1949: Cui enrolled in Arellano Universitys College of Law
--- he continued studying there until his 4th year, 1st semester
--- he was awarded scholarship grants, and his tuition fees for each sem were
returned to him after every sem (scholastic merit)
= TOTAL MONEY REFUNDED: Php 1,033.87
--- his uncle Francisco Capistrano was said dean during his whole stay
in Arellano.
Facts leading to issue
- Dean Francisco severed his relationship with Arellano College, and accepted his
deanship in another college, College of Law of Abad Santos University (he left Arellano)
- Because of this, Cui could no longer pay for his tuition in Arellano for the last sem,
so he also transferred to Abad Santos University, and graduated there
- Cui wished to take the bar exam. However, he could not this without his transcripts
from Arellano University.
- Arellanos condition:
will only give the transcripts if Cui pays back the Php 1,033.87 they
refunded to him
- Cui pays under protest.
This case: Cui sues to try to recover the Php Php 1,033.87 he paid
-Cui presented this,
Memorandum No. 38, series of 1949
- which the Director of Private Schools issued on Aug 16, 1949
- includes:
2. When students are given full or partial scholarships, it is understood that such
scholarships are merited and earned. The amount in tuition and other fees corresponding
to these scholarships should not be subsequently charged to the recipient students when
they decide to quit school or to transfer to another institution. Scholarships should not be
offered merely to attract and keep students in a school.
- Cui claimed that despite presenting this memorandum and the interference of the
Bureau of Private Schools (which asked Arellano to give Cui his transcripts without
payment), Arellano University still demanded his payment, which he did, under protest.

Arellano Universitys defense:

1. before Cui was granted the scholarship grant, he was asked to sign a contract with
this agreement:
"In consideration of the scholarship granted to me by the University, I hereby waive my
right to transfer to another school without having refunded to the University (defendant)
the equivalent of my scholarship cash.
--- Arellano University claims that this contract is binding
2. The memorandum is null and void

Issue: Is the contract between Arellano University and Cui valid?

Lower Court, Arellano University wins
- reasons:
1. the memorandum is not a law. Provisions stated under it are merely
advisory
and not mandatory
2. although the contractual provision "may be unethical, yet it was more
unethical for plaintiff to quit studying with the defendant without good reasons
and simply because he wanted to follow the example of his uncle."

SC held, Cui won.

- lower courts decision reversed.
- Arellano Universitys counter claim dismissed
- Arellano University ordered to pay Cui Php 1,033.87 with interest thereon at the legal rate
from September 1, 1954, and costs
- reasons:
1. The contract stipulation is contrary to public policy, making it void.
- the memorandum incorporated a principle of public policy. It was issued in
1949. If Arellano University understoop the real essence of scholarships and
motives (as reiterated in the memorandum), they wouldnt have entred that contract
with Cui.
2. It is also contrary to good morals.
- inconsistent with sound policy and good morals
- sound policy in Memorandum No. 38: Scholarships are awarded in

recognition of merit , not to keep outstanding students in school to bolster its

prestige.
- morals are principles of morality which have received some kind of social

and practical confirmation.

--- in other schools, scholarships are granted not to attract and to keep
brilliant students in school for their propaganda mine but to reward merit or
help gifted students in whom society has an established interest or a first
lien.